The BTM Standard provides a set of guiding principles that create a seamless management approach that begins with board- and CEO-level issues and connects all the way through technology investment and implementation. This chapter explains the BTM Standard and how it applies to your business.

This chapter is from the book

"Convergence has been the Holy Grail of leaders for a long time. The key is to recognize that it is a journey and not an event."

—Professor John Henderson, Boston University

In Brief

The BTM Standard provides a set of guiding principles that create a seamless management approach that begins with board- and CEO-level issues and connects all the way through technology investment and implementation.

The BTM Maturity Model identifies areas most in need of improvement, fixes the starting point for the enterprise, and specifies the path for change.

The right way to approach BTM implementation is iteratively. An enterprise must determine where it is in order to focus on specific priorities, design and implement specific capabilities against those priorities, and then execute and continuously improve.

Over the past few years, a standard for the management of business technology has emerged—a repeatable set of processes, defined in terms of 17 business capabilities, that lead to intelligent and consistent business technology management. This chapter sets forth the particulars of this Business Technology Management (BTM) Standard and argues that it is not only a solution for the problems that plague technology deployment, but also a competitive advantage for firms that adopt it.

In today’s world, to manage the business well is to manage technology well. And vice versa.

By now, we certainly know what happens when business and technology are managed on two different tracks. Companies spend 10 percent to 40 percent of their revenues on technology and often just can’t shake that sinking feeling that something is wrong.

Hundreds of millions spent by big-name companies on enterprise resource and customer relationship systems have been wasted; nobody thought to redesign underlying work processes or to make sure employees understood what was happening and why. Huge business technology expenditures to lubricate the supply chain of a global apparel maker managed only to wrap that chain around the axle, leaving the company worse off than if it had done nothing at all. As one CEO said in exasperation, "Is this what we get for our $400 million?"

Such expensive failures have led many observers to question whether information technology can ever produce a defensible long-term competitive advantage.

Unquestionably, there have been enough successes to whet the appetite for the rewards of getting it right. In the late 1990s, for example, Herman Miller began offering small businesses no-frills, quality furnishings delivered quickly at a reasonable price. It established a new operating unit, Herman Miller SQA ("Simple, Quick and Affordable"). By applying business technology exceptionally well, it reduced an industry order cycle of about 14 weeks to about 2 weeks. Sears Home Services consolidated all of its information systems to manage its 12,000 service people. Everything is automated and wirelessly connected. The result is huge savings in parts management, huge increases in productivity of their service people, and significant increases in customer satisfaction.

But on the flip side of exceptional success lies precipitous (or perhaps worse, incremental and undetected) failure. The results have been manifest in productivity shortfalls, imposed workforce reductions, damaged corporate reputations and downward market valuations.

These outcomes threaten to marginalize technology’s role in value creation at the very time that it should be brought closer to the business than ever before. Instead, we are seeing chief information officers reporting to the CFO rather than the strategy office or CEO. More symptoms: a headlong rush to outsource business technology, and choke-holds on technology spending, without any truly strategic understanding of either move. With that often comes a pattern of serial CIO—and maybe CEO—replacement, which virtually guarantees that short-term thinking will rule. What appears at first blush to be the fault of the technologist ("Can’t you make this stuff work?") is really a failure to unify business and technology decision making.

Key Terminology

This book develops a new model for managing business and technology. It uses terms that may be new to some, and it uses familiar terms in specific ways that reflect this new model. Here are the most important:

IT, IT assets, and information technology are equivalent terms. They all refer to tangible items ranging from hardware to software to telecommunications to personnel. IT can be thought of as being composed of technology-related goods and services that are typically purchased in discrete quantities. By itself, IT offers only potential value. IT investments and IT capital are investments directly tied to the purchase of IT.

Business technology is the application of IT to deliver a business capability or automate a business operation. Business technology can be thought of as the result of configuring, implementing, applying, and using IT to produce a business result. Business technology investments and business technology capital are investments related to the creation, use, and maintenance of business technology.

Business Technology Management (BTM) is a management science applied to business technology that unifies and improves decision making. BTM provides a structured approach that lets enterprises align, synchronize, and even converge business technology and business management, thus ensuring better execution, risk control, and profitability. BTM investments are investments related to the creation and realization of BTM capabilities.

A Business Technology Management (BTM)capability is a specific competency defined by four critical dimensions: Each capability is ordered by repeatable processes, executed through appropriate organizational structures, and enabled by the right information and technology. There are 17 capabilities grouped into four functional areas: Governance & Organization, Managing Technology Investments, Strategy & Planning, and Strategic Enterprise Architecture.

Companies can move beyond alignment

For many enterprises or operations, alignment of business technology with the business has been considered the Holy Grail. Alignment can be defined as a state where technology supports, enables, and does not constrain the company’s current and evolving business strategies. It means that the IT function is in tune with the business thinking about competition, emerging threats and opportunities, and the business technology implications of each. Technology priorities, investments, and capabilities are internally consistent with business priorities, investments, and capabilities.

When that’s the case, the company has reached a level of BTM that relatively few have achieved to date. Alignment is a good thing, and sometimes sufficient to serve a particular business situation.

But there are higher states to consider (see Figure 1.1), and for some enterprises, synchronization of technology with the business is the right goal. At this level, business technology not only enables execution of current business strategy but also anticipates and helps shape future business models and strategy. Business technology leadership, thinking, and investments may actually step out ahead of the business (that is, beyond what is "aligned" with today’s business). The purpose of this is to seed new opportunities and encourage far-sighted executive vision about technology’s leverage on future business opportunities. Yet the business and technology are synchronized in that the requisite capabilities will be in place when it is time to "strike" the strategic option.

The three states of alignment, synchronization, and convergence demonstrate different relationships between business and technology.

NOTE

Business Technology Management (BTM) is an emerging management science, grounded in research and practice, that aims to unify decision making from the boardroom to the project team.

Finally, there is the state of convergence, which assumes both alignment and synchronization, with technology and business leadership able to operate simultaneously in both spaces. Essentially, the business and technology spaces have merged in both strategic and tactical senses. A single leadership team operates across both spaces with individual leaders directly involved with orchestrating actions in either space. Some activities may remain pure business and some pure technology, but most activities intertwine business and technology such that the two become indistinguishable.

Is this actually possible? Quite so. Examples are abundant for alignment, less so for synchronization, and still fairly rare for convergence. More important, however, how does an enterprise decide what state it should be pursuing, and how does it get there?